By Valerie Kosheleff
California Air Resources Board (CARB) moves forward this month by approving a Draft Resolution to the Cap-and-Trade rulemaking. Cap-and-Trade, also called Emissions Trading, in California is part of the state’s 2006 landmark climate change legislation, Assembly Bill (AB) 32.
Cap-and-Trade is only one component of AB 32, but is perhaps the least well understood. At present, the program is designed to reduce greenhouse gas (GHG) emissions from businesses by “capping” the annual amount allowed to be emitted. If necessary, participating businesses will be able to purchase or “trade” allowances for GHG pollution above that year’s capped amount, utilizing a free-market system, rather than relying solely on government mandates.
The California Cap-and-Trade program will affect only 360 businesses. Some industries such as electricity, import and large industrial facilities will be required to participate in the program beginning in 2012. Others such as distributors of fuels and natural gas will be integrated into the program in 2015. With each passing year, emissions caps will decrease, with the goal of achieving 1990 GHG levels again by 2020.
On one hand, with all the clean technology being developed or already on the market, and the social pressure to improve a company’s “eco-image”, reducing California’s GHG emissions by 20% over the next decade isn’t an unattainable goal. However, historical opponents to Cap-and-Trade have recognized that if not implemented properly, the bad guys will be allowed to continue to pollute while the good guys, who have already taken steps to reduce their environmental footprint or who might have limited resources for their small business, may get left paying the larger bill. Fortunately, CARB has the coming year to iron out the details of this program.